The Casings Plant of Wyoming Machines makes plastics shells for the company’s calculators. (Each calculator requires one shell.) For each of the next two years, Wyoming expects to sell 650,000 calculators. The beginning finished goods inventory of shells at the Casings Plant is 100,000 units. However, the target ending finished goods inventory for each year is 20,000 units. Each unit (shell) requires 6 ounces of plastic. At the beginning of the year, 200,000 ounces of plastic are in inventory. Management has set a target to have plastic on hand equal to four months’ sales requirements. Sales and production take place evenly throughout the year. Required: a. Compute the total targeted production of the finished product for the coming year. b. Compute the required amount of plastic to be purchased for the coming year.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
The Casings Plant of Wyoming Machines makes plastics shells for the company’s calculators. (Each calculator requires one shell.) For each of the next two years, Wyoming expects to sell 650,000 calculators. The beginning finished goods inventory of shells at the Casings Plant is 100,000 units. However, the target ending finished goods inventory for each year is 20,000 units.
Each unit (shell) requires 6 ounces of plastic. At the beginning of the year, 200,000 ounces of plastic are in inventory. Management has set a target to have plastic on hand equal to four months’ sales requirements. Sales and production take place evenly throughout the year.
Required:
a. Compute the total targeted production of the finished product for the coming year.
b. Compute the required amount of plastic to be purchased for the coming year. (Do not round intermediate calculations.)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
